2022 (5) TMI 1402 - AT - Income Tax

Suppressed receipt only on the basis of statement recorded u/s. 132(4) - additional disclosure offered while filling the return u/s 153A - assessee explained that the indoor patient receipts shown in the books was 75 % of the total amount as 25 % was given to the visiting doctors - HELD THAT - As looking to the facts that in the absence of clear evidence for the past year, receipt @ 25 % cannot be added. The benefit of doubt based on the arguments advanced before us goes in favour of the assessee and it is evident that there was no such practice in past found based on the evidences found at the time of search. Her compliance and disclosing the additional income disclosing a sum of Rs. 29,44,800 in PMGKY, wherein she has disclosed a sum which is higher than the addition under dispute for all these years also suggest that no separate addition is called for considering the facts and arguments advanced before us on the offering of the additional income under PMGKY. We found merit in arguments of the assessee that there is no direct or indirect evidence that in past year the assessee got engaged and using same practice of following under-reporting of income in past year and based on the mistake found the assessee has already offered the additional income while complying the notice u/s. 153A of the Act wherein the AO has not found any fault that the said additional income offered is incorrect or under-reported, even the ld DR has not pointed that the past year addition made is based on the evidence found in the course of search. Thus, looking to these facts the addition merely based on the statement and that too for all the years at same rate @ 25 % as suppressed receipt proposed by AO is unwarranted and the same is not survived based on the finding and reasoning placed before us. Even the contention of the ld. CIT(A) sustaining the balance addition from the income already disclosed by the assessee will also not survive as there is no contrary arguments placed by the Ld. DR but mainly repeated the contentions of the AO and Ld. CIT(A). Based on the above finding, addition confirmed by the CIT(A) is deleted for A. Y. 2011-2012 and thus the ground raised by the assessee are allowed. Addition of expenditure from undisclosed source - revised capital account filed with the return of income filed in response to notice u/s. 153A - assessee has argued before us that the seized material is to be read together when the assessee has already disclosed additional income for the year under consideration and the expenses incurred is covered that such investment no separate addition is required to be made in the case of the assessee as she is having the additional income for her disposal to meet such investment in the capital asset - HELD THAT - It is not disputed that the assessee has not disclosed the additional income. It is also not disputed that the investment made in AC is of the year under consideration and we find force in the argument of ld. AR of the assessee that the income and investment both cannot be taxed. Whereas, the Ld. DR and ld CIT(A) contended only the same is not disclosed in the original return and assessee cannot take benefit of that additional income merely by filing the revised capital account. This view is not correct as the additional income disclosed by the assessee has already suffered the tax and the said additional income is available with the assessee and the investment made in AC is not exceeding that income thus, the income and expenses both cannot be taxed and benefit of set off of income with that of the expenses of the same can be given and the thus the addition made to the extent of Rs. 27,500/- for purchase of AC is deleted. Thus the ground no 2 raised by the assessee in this appeal is allowed. Addition u/s 69A - AO observed that during the year, there is increase in the capital of assessee source of which has neither been explained nor any evidence in this regard is produced - HELD THAT - During the course of hearing, the ld. AR of the assessee has drawn our attention to the revised capital account and original capital account wherein the credit of Rs. 75,000 is appearing in both the capital account. Thus, the findings of the lower authorities are incorrect on facts so far as to the contention that the same was in the revised capital account is incorrect that credit is already appearing in the old capital account already filed in the original return of income. Thus, the contention of the DR and lower authorities is incorrect that the same is filed or claimed or credited in the revised capital account is in fact not so, and thus in the absence of any incriminating material in respect of this credit the addition of credit already reflected in the original return of income can not be made in proceeding-initiated u/s. 153A of the Act considering the various decision relied upon. This addition has no merit and is required to be deleted. Thus, the Ground no. 3 raised by the assessee in this appeal is allowed. Jewellery as unaccounted purchase chargeable to tax u/s. 69C - HELD THAT - DR has not disputed the fact that of the AR of the assessee that these ornaments are not found in the course of search in the absence of the assets it self at the time of purchase there is no case rest with the department that the assessee has made purchase and invested the said amount in the jewellery as unaccounted purchase chargeable to tax u/s. 69C of the Act. Not only that there is no details mentioned about the terms of the payment received, receivable or details of payment and its mode to be executed on this paper heavily relied upon by the department. Thus, in absence of the impugned asset being not available at the time of search the contention of the department has no force and there is no reasons so as to believe the arguments placed by the AR of the assessee that in the absence of the these jewellery not found the addition cannot be made. Looking to the force of argument of the Ld. AR of the assessee the addition merely based on this loose paper cannot be made and the same is required to be deleted. Thus, the Ground no. 2 raised by the assessee is allowed. Addition u/s 69C - purchase of fridge by the assessee - HELD THAT - Looking to the bills and receipt shown and attached to assessee s paper book it is clear that the price of the fridge is Rs. 80,000 as the same has been paid by the assessee and signature of the person accepting that money is written and page 16 being the purchase bill consisting of cash memo which is for Rs 49,000/- this being read with the loose receipt it is not separately shown that bill amount of Rs. 49,000/- already given by the assessee. In absence of this details, the cost cannot be considered more than what is confirmed by the party in rough note at Rs. 80,000/- given at the time of delivery taken. This amount of Rs. 80,000/- included by the assessee in a revised capital account and withdrawal ledger filed by the assessee s paper book at page 41 42 and sufficient undisclosed income offered in the return filed u/s. 153A is already cover this investment/Expenditure for purchase of this fridge cannot be made separately as the source of this investment / expense already suffered the tax in the return filed in response to notice u/s. 153A - Ground no 3 raised by the assessee is allowed. Expenditure on construction work of basement flooring - HELD THAT - This amount included by the assessee in a revised capital account and withdrawal ledger filed by the assessee s paper book and sufficient undisclosed income offered in the return filed u/s. 153A. This income already covers this payment made to M/s. Ratna Construction separately as the source of this payment already suffered the tax in the return filed in response to notice u/s. 153A of the Act. Thus, the Ground no 4 raised by the assessee is allowed. Unexplained expenditure - Set off of receipt against unexplained expenditure - HELD THAT - Since, the addition for which set off against income is sought is allowed considering the merits of the addition thus, allowing of set off against income is already considered while dealing with each addition in ground no. 2,3 4 above. This ground becomes academic and needs not required to be adjudicated upon for technical purpose and the same is allowed.

Summary

Issues Involved:
1. Alleged suppression of professional receipt.
2. Addition based on the statement recorded u/s. 132(4) of the Income Tax Act.
3. Addition based on loose paper found during search.
4. Unexplained investment in jewelry.
5. Unexplained expenditure in construction.
6. Unexplained investment in purchase of fridge.
7. Set-off of suppressed receipt against unexplained expenditure.

Detailed Analysis:

1. Alleged Suppression of Professional Receipt:
The primary issue across all appeals was the alleged suppression of professional receipts based on a statement recorded under section 132(4) and a bill book found during the search. The statement indicated that 25% of receipts were underreported. The assessee retracted this statement, explaining that the practice of giving 25% to visiting doctors began in the current financial year and could not be applied retrospectively for the past six years. The Tribunal found merit in the assessee's explanation and noted that there was no corroborative evidence for the past years. The Tribunal concluded that the addition based solely on the statement without supporting evidence was unwarranted and deleted the addition for all years under appeal.

2. Addition Based on the Statement Recorded u/s. 132(4):
The Tribunal emphasized that statements recorded under section 132(4) are important but not conclusive without corroborative evidence. The assessee's retraction was supported by detailed explanations and a request for a statement on oath, which was not refuted by the authorities. The Tribunal held that in the absence of incriminating material, addition based solely on the statement was not justified.

3. Addition Based on Loose Paper Found During Search:
For the assessment year 2013-14, the addition was based on a loose paper indicating suppressed receipts. The Tribunal found that the assessee had already offered additional income based on discrepancies found during the search. The Tribunal deleted the addition, noting that the income and investment could not be taxed simultaneously.

4. Unexplained Investment in Jewelry:
For the assessment year 2016-17, the addition was based on a slip indicating an order for jewelry worth Rs. 3,93,000/-. The Tribunal found that there was no evidence of actual payment or possession of the jewelry. The Tribunal concluded that the addition based on suspicion and without corroborative evidence was not justified and deleted the addition.

5. Unexplained Expenditure in Construction:
The Tribunal addressed the addition of Rs. 30,800/- for construction expenditure, noting that the payment was duly recorded in the revised capital account and the source was explained. The Tribunal deleted the addition, emphasizing that both income and expenditure could not be taxed.

6. Unexplained Investment in Purchase of Fridge:
The Tribunal examined the addition of Rs. 1,29,000/- for the purchase of a fridge, noting that the actual cost was Rs. 80,000/-, which was recorded in the capital account. The Tribunal deleted the addition, stating that the source of payment was explained and the income had already been taxed.

7. Set-off of Suppressed Receipt Against Unexplained Expenditure:
The Tribunal allowed the set-off of suppressed receipts against unexplained expenditure, noting that the assessee had sufficient declared income to cover the expenditure. The Tribunal concluded that the addition confirmed by the CIT(A) was unwarranted and directed the deletion of the addition.

Conclusion:
The Tribunal allowed all the appeals of the assessee, deleting the additions made by the AO and confirmed by the CIT(A). The Tribunal emphasized the importance of corroborative evidence and the need for clear incriminating material to justify additions based on statements recorded during searches. The Tribunal's decision was based on a thorough examination of the facts, explanations provided by the assessee, and relevant judicial precedents.